• LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

Avoiding new Medicare tax on home sale

by on
in Small Business Tax

Q. I’m planning to sell my home in the next few years. Will the new Medicare tax apply to a home sale gain? K.W., Ronkonkoma, N.Y.

A. It might. The 3.8% Medicare tax, which takes effect in 2013, can hit only the portion of the gain that doesn’t qualify for the home sale gain exclusion. The exclusion is $500,000 for qualified homeowners who file jointly ($250,000 for single filers). However, any gain in excess of the excluded amount is treated as a capital gain, which could be subject to the 3.8% tax on the lesser of: (1) “net investment income” (including capital gains) or (2) the amount of modified adjusted gross income (MAGI) in excess of $250,000 for joint filers ($200,000 for single filers).

Bottom line: The 3.8% Medicare tax can potentially hit part of a home sale gain for sales in 2013 and beyond, but only a relatively small percentage of sellers will fall victim.

Tip: Because vacation homes are ineligible for the home sale gain exclusion privilege, gains from selling vacation properties in 2013 and beyond are more likely to get hit with the 3.8% Medicare tax.

Like what you've read? ...Republish it and share great business tips!

Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...

We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.

The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.

" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/17278/avoiding-new-medicare-tax-on-home-sale "

Related Articles...

    No matches

Leave a Comment